Thinking of renting your current Atlanta home and buying a new one?

Renting your Atlanta home and buying a new one?

Buyers who intend to buy a new home and convert their existing home into a rental property are in for an uphill battle in terms of financing their new home.

Why? 

With the increasing number of foreclosures currently in the market, there is a growing trend of mortgage fraud that is wreaking havoc on the housing and lending industries.

Many homeowners are understandably struggling to make payments on their home and avoid foreclosure but an alarming number of homeowners have found that even though they may be able to make their monthly mortgage payment, they find their property value has declined to an intolerable level.  Fearing the value will not fully recover, they are choosing to stop making payments and allow the foreclosure process to occur.

If that isn't tough enough, these homeowners, knowing their credit will be severely damaged by the foreclosure, are opting to buy a new home PRIOR to foreclosing on their existing home.

Fannie Mae has recognized the problem and has instituted stricter underwriting requirements to combat this mortgage fraud.  A borrower who now chooses to buy a new home and turn their existing home into a rental property must now qualify for the new loan counting BOTH mortgage payments against them AND are prohibited from including any rental income to their qualifying numbers.

Exception #1:  If the current home being converted to a rental property has verified equity of 30% or more, the rental income may be used to qualify.

Exception #2:  FHA has not YET followed Fannie Mae's lead and you may still use rental income from the newly converted rental property in qualifying regardless of the equity in the home.

If you have questions, please don't hesitate to call us at 404.432.1844. 

KERRY LUCASSE   ::   KELLER WILLIAMS REALTY  ::  404.432.1844   ::  www.ATLhomesearch.com